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How To Sell A Transport Business

Brisbane Business Broker Steve Blaby has sold a number of transport businesses in the past few years. In a recent catch up with Dru, he shared key takeaways for owners of transport businesses to be aware of before going to market. They were:

Sale Price Maximisation – Diverse Client Base

Potential acquirers of transport businesses get scared off when they see that one debtor or client is responsible for a large proportion of sales revenue. If they were to leave after they made their purchase, what would happen to their investment? The ideal situation is no one client being responsible for more than 20% of sales.

Buyer Profile

From Steve’s mix of previous sales, he noted that transport businesses going to market at less than $2m are likely to be purchased by an individual entrepreneur while larger businesses worth over $2m typically get picked up by an industry buyer. Whether that by a direct competitor or a related business who can see the value in the add on.

Deal Structure – Asset Sale vs Share Sale

The largest transport deal Steve brokered would have sold for $25 million as an asset sale however it ended up transacting as a share sale for $8m. This saved the sellers a lot of tax. Before going to market, it is recommended to chat through the pros and cons of doing either a share sale or asset sale with your accountant. This will ensure you get the best outcome possible once the dust settles.

Deal Structure – Fleet Value

A large proportion of the sales price of a transport business is typically made up in fleet value. Accordingly, buyers carefully consider the quality and the condition of the fleet when weighing up an acquisition. It is in a sellers best interest to ensure clear maintenance schedules are available for buyers and that the fleet is in top condition for any inspections.

Important Consideration – Contracts

Due to the fluid nature of contracts in the transport industry, buyers typically don’t put a lot of weight on them when evaluating the sales price.

Buyer Demand

Buyer demand remains strong for transport and freight businesses. It’s a resilient industry for acquisitions as both individuals and industry buyers have interest due to the relative ease of operation.

Have you got a transport or freight business that you are contemplating selling? Book a complementary consultation with an industry expert today!

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